IDEAS home Printed from https://ideas.repec.org/a/spt/admaec/v9y2019i5f9_5_3.html
   My bibliography  Save this article

Shadow Economy: Definitions, terms & theoretical considerations

Author

Listed:
  • Paraskevi Koufopoulou
  • Colin C. Williams
  • Athanassios Vozikis
  • Kyriakos Souliotis

Abstract

The last decades, many scholars highlighted the shadow economic activities, regarding their disadvantages (unemployment, impoverishment etc) and advantages (intensifies competition, flexibility in employment etc). During the financial crisis, informal activities rose in noisy way, which triggered the development of special definitions to describe a wide range of actions which in turn have gradually configured and updated the content of the shadow economy term. In this paper we present the theoretical background of the shadow economy term, by selecting the main worldwide literature published from 1973 to 2018. Many studies have tried to definite the shadow economy term but none has ever presented explicitly the adjectives and nouns that are related to shadow economy. Taking into account this analysis it would be useful for the scholars to mention extensively the theoretical background about shadow economy, the critiques towards the school of thoughts, in order to choose the appropriate term in each case and to design and implement the indicative method to estimate the size of the shadow economy. Â JEL classification numbers: E26

Suggested Citation

  • Paraskevi Koufopoulou & Colin C. Williams & Athanassios Vozikis & Kyriakos Souliotis, 2019. "Shadow Economy: Definitions, terms & theoretical considerations," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 9(5), pages 1-3.
    • Handle: RePEc:spt:admaec:v:9:y:2019:i:5:f:9_5_3
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/AMAE%2fVol%209_5_3.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Christopher Bajada, 2002. "How Reliable are the Estimates of the Underground Economy?," Economics Bulletin, AccessEcon, vol. 3(14), pages 1-11.
    2. Kwame Adom, 2016. "Tackling informal entrepreneurship in Ghana: a critical analysis of the dualist/modernist policy approach, some evidence from Accra," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 28(2/3), pages 216-233.
    3. Bernabe, Sabine, 2002. "Informal employment in countries in transition: a conceptual framework," LSE Research Online Documents on Economics 6389, London School of Economics and Political Science, LSE Library.
    4. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    5. Jordi Caballé & Judith Panadés, 2007. "Tax Rates, Tax Evasion, and Growth in a Multi-period Economy," Hacienda Pública Española / Review of Public Economics, IEF, vol. 183(4), pages 67-80, december.
    6. Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Chapters, in: The Demand for Currency Relative to Total Money Supply, pages 1-37, National Bureau of Economic Research, Inc.
    7. Thorvald Grung Moe, 2012. "Shadow Banking and the Limits of Central Bank Liquidity Support: How to Achieve a Better Balance between Global and Official Liquidity," Economics Working Paper Archive wp_712, Levy Economics Institute.
    8. Gibson, Bill & Kelley, Bruce, 1994. "A Classical Theory of the Informal Sector," The Manchester School of Economic & Social Studies, University of Manchester, vol. 62(1), pages 81-96, March.
    9. Ioana Alexandra Horodnic & Colin C. Williams, 2021. "Cash wage payments in transition economies: Consequences of envelope wages," IZA World of Labor, Institute of Labor Economics (IZA), pages 280-280, October.
    10. Buiter, Willem H., 2014. "The simple analytics of helicopter money: Why it works - always," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-51.
    11. Sarah Philipson & Joakim Philipson, 2016. "From Budapest to Berlin - the role of reputation in the market economy," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 28(2/3), pages 310-322.
    12. Colin C. Williams & Ioana A. Horodnic, 2017. "Evaluating the Illegal Employer Practice of Under-Reporting Employees’ Salaries," British Journal of Industrial Relations, London School of Economics, vol. 55(1), pages 83-111, March.
    13. Otusanya, Olatunde Julius, 2011. "The role of multinational companies in tax evasion and tax avoidance: The case of Nigeria," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(3), pages 316-332.
    14. Chaudhuri, Tamal Datta, 1989. "A theoretical analysis of the informal sector," World Development, Elsevier, vol. 17(3), pages 351-355, March.
    15. repec:ilo:ilowps:354173 is not listed on IDEAS
    16. Tokman, Victor E., 1978. "An exploration into the nature of informal--formal sector relationships," World Development, Elsevier, vol. 6(9-10), pages 1065-1075.
    17. Schneider, Friedrich, 2014. "The Shadow Economy and Shadow Labor Force: A Survey of Recent Developments," IZA Discussion Papers 8278, Institute of Labor Economics (IZA).
    18. Palan, R. & Nesvetailova, A., 2013. "The Governance of the Black Holes of the World Economy: Shadow Banking and Offshore Finance," CITYPERC Working Paper Series 2013-03, Department of International Politics, City University London.
    19. Dibyendu Maiti & Kunal Sen, 2010. "The Informal Sector in India," Journal of South Asian Development, , vol. 5(1), pages 1-13, April.
    20. Abu Shonchoy & PN Junankar, 2014. "The informal labour market in India: transitory or permanent employment for migrants?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-27, December.
    21. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," The World Bank Economic Review, World Bank, vol. 13(2), pages 275-302, May.
    22. Nataliia Ostapenko & Colin C. Williams, 2016. "Determinants of entrepreneurs' views on the acceptability of tax evasion and the informal economy in Slovakia and Ukraine: an institutional asymmetry approach," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 28(2/3), pages 275-289.
    23. Marijana Baric & Colin C. Williams, 2013. "Tackling the Undeclared Economy in Croatia," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 11(1), pages 7-36.
    24. Chen, Martha Alter. & Jhabvala, Renana. & Lund, F. J., 2002. "Supporting workers in the informal economy : a policy framework," ILO Working Papers 993541733402676, International Labour Organization.
    25. Blunch, Niels-Hugo & Canagarajah, Sudharshan & Raju, Dhushyanth, 2001. "The informal sector revisited : a synthesis across space and time," Social Protection Discussion Papers and Notes 23308, The World Bank.
    26. George M. Georgiou, 2007. "Measuring the Size of the Informal Economy: A Critical Review," Working Papers 2007-1, Central Bank of Cyprus.
    27. Schneider,Friedrich & Enste,Dominik H., 2016. "The Shadow Economy," Cambridge Books, Cambridge University Press, number 9781316600894, September.
    28. Pinaki Bose & Luciana Echazu, 2007. "Corruption with Heterogeneous Enforcement Agents in the Shadow Economy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 285-296, June.
    29. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
    30. George M. Georgiou, 2007. "Measuring the Size of the Informal Economy: A Critical Review," Working Papers 2007, Central Bank of Cyprus.
    31. Ted London & Stuart L Hart, 2004. "Reinventing strategies for emerging markets: beyond the transnational model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 350-370, September.
    32. Misbah Kiani & Adeel Ahmed & Khalid Zaman, 2015. "Combining qualitative and quantitative approaches for measuring underground economy of Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(1), pages 295-317, January.
    33. Sabine Bernabe, 2002. "Informal Employment in Countries in Transition: A conceptual framework," CASE Papers case56, Centre for Analysis of Social Exclusion, LSE.
    34. repec:jes:wpaper:y:2012:v:4:p:541-553 is not listed on IDEAS
    35. Anton Marinov, 2008. "Hidden economy in the rural regions of Bulgaria," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 5(1), pages 71-80, June.
    36. Loredana Maftei, 2012. "An Overview Of The Tobacco Black Market In Europe," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(3a), pages 541-553, September.
    37. Thomas Moutos & Christos Tsitsikas, 2010. "Whither Public Interest: The Case of Greece's Public Finances," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(2), pages 170-206, June.
    38. Jacques Charmes, 2012. "The Informal Economy Worldwide: Trends and Characteristics," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(2), pages 103-132, May.
    39. Colin C. Williams, 2006. "The Hidden Enterprise Culture," Books, Edward Elgar Publishing, number 3948.
    40. Richard Bird & Sally Wallace, 2003. "Is it Really so Hard-To-Tax? The Context and Role of Presumptive Taxes," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0316, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    41. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551.
    42. Gerasimos T. Soldatos, 1996. "Growth and the Interaction Between Money and the Underground Economy," Revue Économique, Programme National Persée, vol. 47(1), pages 73-84.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Imamoglu, Hatice, 2021. "The role of financial development on the underground economy in regards to Europe’s 2020 strategy," Economic Systems, Elsevier, vol. 45(2).
    2. Paraskevi Koufopoulou & Colin C. Williams & Athanassios Vozikis & Kyriakos Souliotis & Antonios Samprakos, 2021. "Estimating Shadow Economy Size in Greece 2000 - 2018: A Flexible MIMIC Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 71(3-4), pages 23-47, July-Dece.
    3. Younas, Zahid Irshad & Qureshi, Atiqa & Al-Faryan, Mamdouh Abdulaziz Saleh, 2022. "Financial inclusion, the shadow economy and economic growth in developing economies," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 613-621.
    4. Xue Wang, 2020. "Mobile Payment and Informal Business: Evidence from China's Household Panel Data," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(3), pages 90-115, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rajeev K. Goel & James W. Saunoris & Friedrich Schneider, 2019. "Growth In The Shadows: Effect Of The Shadow Economy On U.S. Economic Growth Over More Than A Century," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 50-67, January.
    2. Pasovic Edin & Efendic Adnan S., 2018. "Informal Economy in Bosnia and Herzegovina – An Empirical Investigation," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 112-125, December.
    3. Stefan Petranov & Dimitar Zlatinov & Milen Velushev & Lillyana Georgieva & Radostina Ivcheva, 2022. "Shadow Economy and Production Factors: Results from an Empirical Analysis with a Panel Data Set," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-64.
    4. Sana Ullah & Colin C. Williams & Babur Wasim Arif, 2019. "The Impacts Of Informality On Enterprise Innovation, Survival And Performance: Some Evidence From Pakistan," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-19, September.
    5. Oksana Nezhyvenko, 2018. "Informal Employment in Ukraine and European Union Transition Countries," Erudite Ph.D Dissertations, Erudite, number ph18-03 edited by Philippe Adair.
    6. Colin C. Williams & Adnan S. Efendic, 2020. "Evaluating the Relationship Between Migration and Participation in Undeclared Work: Lessons from Bosnia and Herzegovina," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 592-606, December.
    7. Dagmara Nikulin & Ewa Lechman, 2021. "Shadow Economy in Poland: Results of the Survey," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 49-65, Springer.
    8. Amanda Haarman & Marcus M. Larsen & Rebecca Namatovu, 2022. "Understanding the Firm in the Informal Economy: A Research Agenda," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 3005-3025, December.
    9. Williams Colin C, 2019. "Explaining and tackling the informal economy: an evaluation of competing perspectives," Open Economics, De Gruyter, vol. 2(1), pages 63-75, January.
    10. Rayees Ahmad Sheikh & Sarthak Gaurav, 2020. "Informal Work in India: A Tale of Two Definitions," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 1105-1127, September.
    11. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    12. Mutascu Mihai & Hegerty Scott W., 2022. "The role of refugees in the underground economy of the European Union," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 13(1), pages 1-19, January.
    13. Roberto Dell'Anno, 2022. "Theories and definitions of the informal economy: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1610-1643, December.
    14. Krasniqi Besnik A. & Williams Colin C., 2017. "Explaining individual- and country-level variations in unregistered employment using a multi-level model: evidence from 35 Eurasian countries," South East European Journal of Economics and Business, Sciendo, vol. 12(2), pages 61-72, December.
    15. Lahlou, Kamal & Doghmi, Hicham & Schneider, Friedrich, 2020. "The Size and Development of the Shadow Economy in Morocco," Document de travail 2020-3, Bank Al-Maghrib, Département de la Recherche.
    16. Michael Grimm & Isabel Günther, 2005. "Inter- and Intra-household Linkages Between the Informal and Formal Sector: a Case Study for Urban Burkina Faso," WIDER Working Paper Series RP2005-14, World Institute for Development Economic Research (UNU-WIDER).
    17. Bill Gibson & Diane Flaherty, 2016. "Juridical and Functional Informality: From Theory to Practical Policy," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 10(4), pages 409-445, November.
    18. Sahnoun, Marwa & Abdennadher, Chokri, 2019. "The nexus between unemployment rate and shadow economy: A comparative analysis of developed and developing countries using a simultaneous-equation model," Economics Discussion Papers 2019-30, Kiel Institute for the World Economy (IfW Kiel).
    19. Glenn Abela & Tiziana Gauci & Noel Rapa, 2022. "An Analysis of The Shadow Economy in Malta: A Currency Demand and MIMIC Model Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 12(1), pages 41-50.
    20. Leandro Medina & Friedrich Schneider, 2019. "Shedding Light on the Shadow Economy: A Global Database and the Interaction with the Official One," CESifo Working Paper Series 7981, CESifo.

    More about this item

    Keywords

    shadow economy; informal economy; informal sector; shadow banking; tax havens; off shore financial centers.;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:admaec:v:9:y:2019:i:5:f:9_5_3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.